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Politics, economy derailing new listings
NUNTAWUN POLKUAMDEE
The Stock Exchange of Thailand and the Market for Alternative Investment would miss their new listing target of 37 companies this year due to political and economic uncertainties.
Vichate Tantiwanich, the SET executive vice-president, said the SET index has fallen nearly 20% this year due to a variety of factors.
Weakness in the US economy has caused foreign investors to exit emerging markets including Thailand.
Rising oil prices have also affected economic growth, market sentiment and market valuations, leading a number of potential new listings now delaying their initial public offering plans. The price-to-earning ratio (P/E) of the SET now stands at around 10 to 11 times.
''The low P/E has led some firms to worry that they may not raise as much funds as they had previously expected. Some are also worried that their share values would fall after the listings,'' Mr Vichate said.
Companies are also concerned that their future business plans will be affected by high inflation and cost uncertainty.
The SET has a listing target of 37 companies in 2008, of which 25 are for the main board and 12 for the MAI.
''The MAI target may be possible or at least close to the estimation,''Mr Vichate said.
The SET claimed earlier this year that 107 companies showed interest in listing on the two stock markets. The SET also offers incentives to newly-listed companies such as low advisory fees for those that file the listing proposals to the Securities and Exchange Commission by June and trade by the end of this year. More than 10 companies went for this programme.
However, since the sub-prime crisis took a toll on the equity markets around the world, many companies decided to delay their listings. Large companies may move slower and have a deeper impact than small companies.
Mr Vichate said the SET still maintained the target of new listings for the main board this year at 25 companies even though the number of companies delaying their plans rose.
''The SET has a new strategy to increase listings by working with commercial banks to select potential companies that have growth prospects. These companies have low capital bases and banks can't lend to them. They should raise funds from the equity market instead,'' he said.
So far, the SET has coordinated with several banks such as Kasikornbank, Siam Commercial Bank and Bangkok Bank to screen companies that have listing potential.
The SET itself has plans to demutualise to increase market competitiveness. Under the plan, there will be an expansion of the investor base and an increase of new products, so the SET has to work hard to convince large companies to list on the SET and medium and small companies to list on MAI.
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